A business that leases real estate and improvements (buildings, etc.) in the form of space for offices, a warehouse, a restaurant, a nail or hair salon, a clothing store, a coffee shop, or other commercial (nonresidential) space will usually be required to sign a written contract known as a commercial lease agreement.

If the tenant (the business occupying the space) who signs a commercial lease agreement fails to pay the rent on time, the landlord may have the right to charge late fees, terminate the lease, and lock the commercial tenant out of the space by changing the locks.

A commercial landlord’s ability to charge late fees generally depends on the specific language in the written lease agreement and the state's contract law.

Contract law in most states recognizes an implied duty of good faith and fair dealing between parties to a contract, and a commercial landlord who charges late fees because the tenant is an hour late paying the rent may be in breach of the landlord’s implied duty of good faith and fair dealing—unless, for example, the lease agreement specifies an hour (12:00 p.m.) of the day by which rent is due and states that time is of the essence.

In New Mexico (NM), a commercial lease agreement is a binding contract between a landlord and a business tenant for the rental of nonresidential property. The terms of the lease, including the payment of rent and the imposition of late fees, are governed by the specific language of the lease agreement and NM state contract law. If a tenant fails to pay rent on time, the landlord may charge late fees if such fees are explicitly stated in the lease. Additionally, the landlord may have the right to terminate the lease and lock out the tenant for nonpayment of rent, subject to the lease terms and applicable state laws. New Mexico recognizes the implied covenant of good faith and fair dealing in contracts, which requires both parties to act in a manner that does not destroy the right of the other party to receive the benefits of the contract. Therefore, a landlord's actions, such as charging late fees for rent that is only an hour late, must align with this duty of good faith and fair dealing, and the specific provisions of the lease agreement. It is important for both landlords and tenants to understand their rights and obligations under the lease and state law to avoid potential disputes.